PATIDAR BUILER PRIVATE LTD.,BHOPAL vs. ASSESSING OFFICER, BHOPAL

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by order of first appeal dated 11.12.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 28.03.2013 passed by learned JCIT, Range-2, Bhopal [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2010-11, the assessee has filed this appeal.

Patidar Builder Pvt. Ltd. ITA No. 556/Ind/2023 – AY 2010-11 AO issued notices u/s 143(2)/142(1) which were complied by assessee.

Finally, the AO passed assessment-order u/s 143(3) determining total

income at Rs. 2,23,92,730/- after making certain disallowances/additions.

Aggrieved, the assessee carried matter in first-appeal and got part relief. Still

aggrieved, the assessee has come in next appeal before us.

“ 1. On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the addition made by Assessing Officer under Section 40A(3) of the Act amounting to Rs.637595/-. The Appellant prays that the addition be directed to be deleted. 2. On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the disallowance made by Assessing Officer in respect of bad debts amounting 294240/- under Section 37 of the Act. The Appellant prays that the disallowance be directed to be deleted. 3. On the facts and circumstances of the case and in law the learned CIT(A) has erred in confirming the addition made by Assessing Officer under section 68 of the Act amounting to Rs. 4375120/- holding it as bogus since non- genuine. Further the CIT(A) erred in not deciding the ground in full with respect to advances amounting to Rs. 268480/- made by the AO. The Appellant prays that the said advances be held as genuine and the addition be directed to be deleted.”

Ground No. 1:

6,37,595/- made by AO and upheld by CIT(A) on account of payments made

in violation of section 40A(3).

careful consideration of the details of payments filed by Ld. AR for assessee

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Patidar Builder Pvt. Ltd. ITA No. 556/Ind/2023 – AY 2010-11 in Written-Synopsis, we find that the assessee has made as many as 15

cash payments on different dates/days to the suppliers of material and

labour purchased by assessee for consumption. The details submitted by Ld.

AR clearly indicates that the suppliers are private parties. Ld. AR agrees that

the payments attract disallowance u/s 40A(3) but he defends assessee’s

case on two-fold premises. The first defense pleaded by Ld. AR is such that

all payments have been made towards genuine business expenses and

hence disallowance should not be made. However, this pleading is made for

the sake of argument only and we indicated to Ld. AR during hearing itself

that his contention/claim remains unsubstantiated to which Ld. AR

instantly agreed. Therefore, the pleading is rejected.

were made on Saturdays and Sundays:

Ld. AR submitted that the assessee deserves benefit of following exception

provided in Rule 6DD(j) of Income-tax Rules, 1962 according to which the

payment required to be made on a day on which banks were closed on

account of holiday cannot be disallowed:

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Patidar Builder Pvt. Ltd. ITA No. 556/Ind/2023 – AY 2010-11 “(j) Where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike.” Initially, Ld. AR submitted that the banks were closed on Saturdays and

Sundays but on further deliberation and strong opposition by Ld. DR for

revenue, the Ld. AR agreed that he does not have any evidence to establish

that the banks were closed on Saturdays (in the year 2009 / 2010 when the

impugned payments were made). However, he submitted that the banks

certainly remain closed on Sundays. Ultimately, both sides agreed that the

benefit can be granted to assessee for the payment of Rs. 41,730/- made on

Sunday to M/s Laxmi Iron appearing at S.No. 5 in the Table above. In that

view of matter, we delete the disallowance to the extent of Rs. 41,730/- and

uphold rest of the disallowance. The AO will modify assessment-order

accordingly. This ground is partly allowed.

Ground No. 2:

2,94,240/- made by AO and upheld by CIT(A) on account of deduction of

bad debt.

careful consideration of the facts of issue narrated by Ld. AR in Written-

Synopsis, we find that the assessee claims that a sum of Rs. 5,00,000/- was

given by way of advance to one “Shri Chatur Narayan” on 16.08.2007 vide

Cheque No. 705791 towards buying a piece of land. However, the deal was

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Patidar Builder Pvt. Ltd. ITA No. 556/Ind/2023 – AY 2010-11 cancelled and the assessee could recover only Rs. 2,05,760/- and since the

remaining amount of Rs. 2,94,240/- could not be recovered, the assessee

ultimately debited to P&L A/c and claimed deduction. The issue was

deliberated and it is observed that the assessee has not filed any supporting

evidence before lower authorities and even before ITAT except filing the

Ledger A/c of Shri Chatur Narayan extracted from its own books of account.

Ld. AR for assessee, however, requested that the assessee has claimed a

genuine deduction of loss suffered by it and the same should not be

disallowed for lack of evidence. Ld. AR requested that the assessee shall

make one more effort to gather evidence in this regard and hence this issue

may be restored to the file of AO for a fresh adjudication. Ld. DR for revenue,

however, objected and submitted that the assessee has not brought any

evidence till now, hence the disallowance made by AO must be upheld

without giving any further opportunity to assessee. After a careful

consideration, we find that since we are remanding the next Ground No. 3 to

the file of AO for a fresh adjudication, there would be no prejudice to

revenue if this issue in Ground No. 2 is also restored at the level of AO. At

the best, the restoration of this issue to AO would advance the cause of

justice by enabling the assessee to submit evidence and at the same time,

the AO would be able to make a better adjudication to collect legitimate tax

from assessee. If the assessee still fails to submit evidence before AO, the AO

would be entitled to make addition. In that view of matter, we remand this

ground to the file of AO for a fresh adjudication after considering any

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Patidar Builder Pvt. Ltd. ITA No. 556/Ind/2023 – AY 2010-11 evidences as may be filed by assessee and after giving necessary

opportunities to assessee. Accordingly, this ground is allowed for

statistical purpose.

Ground No. 3:

43,75,120/- (correct amount should be Rs. 46,43,800/-) made by AO and

upheld by CIT(A) on account of unexplained advances received from

customers.

consideration of the orders of lower-authorities, we find that the assessee

has received impugned advances from 10 customers (Page 9 of assessment-

order). During assessment-proceedings, when the AO asked assessee to

explain these advances, the assessee filed a detailed reply dated 22.03.2013

which is re-produced by AO in Para 7.2 of assessment-order. In the reply so

submitted, the assessee claimed that the impugned advances received from

customers were either adjusted against sales made to those customers or

refunded to those customers in subsequent years from time to time. But the

AO, vide Para 7.3 of assessment-order, rejected assessee’s submission for

want of supporting evidences. Although the AO made an attempt to collect

evidences from customers through the process of section 131 but did not get

any support from those customers also. Ultimately, the AO concluded

against assessee and made addition. During first-appeal, the assessee filed

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Patidar Builder Pvt. Ltd. ITA No. 556/Ind/2023 – AY 2010-11 its submission to CIT(A) on the same line as filed to the AO. Further, the

assessee also filed an application under Rule 46A of Income-tax Rules, 1962 to CIT(A) for admission of additional evidences, copy of assessee’s application is filed at Page 58 of Paper-Book. However, the CIT(A) has

echoed the observations of AO only and has nowhere discussed the assessee’s application and the evidences so filed. After deliberation, the learned Representatives of both sides were ad idem that this issue should go

back to the file of AO for adjudication afresh. We accordingly remit this issue to AO for a fresh adjudication after considering assessee’s evidences

and after giving necessary opportunities to assessee. The ground raised by assessee is allowed for statistical purpose.

Order pronounced in open court on 28/07/2025

Sd/- Sd/-

(PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore

िदनांक/Dated : 28/07/2025

Patel/Sr. PS

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Patidar Builder Pvt. Ltd. ITA No. 556/Ind/2023 – AY 2010-11 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPYSr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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